Turkish Economy Minister: Weaker lira might be beneficial

Devaluation of the Turkish Lira should be considered before deciding in favor of a tight monetary policy, Economy Minister of Turkey, Nihat Zeybekci said on Wednesday.

Speaking at a press conference, Zeybekci said that a competitive currency rate is positive for exports as well as for the Turkish economy as a whole. Many countries have allowed their currencies to lose value so as to boost their exports and to stimulate the economy.

On Tuesday, Turkeys central bank announced that a decision on reducing interest rates would be delayed until Feb. 24.

In the lead-up to the announcement, The Turkish lira dropped about 4 percent against the dollar in four days after Central Bank Governor Erdem Basci hinted that a rate cut might be put through on Tuesday.

The markets had expected the Central Bank to cut rates, but that didn't happen. Would there be harm to the economy from the devaluation in Turkish lira? This should be discussed, Zeybekci said.

Central Bank should take the initiative for interest rates to lead markets and be more daring, Zeybekci added.

The central bank gave no reason for its delay in cutting interest rates, but said that the current decline in the rate of inflation was "satisfactory."